Thursday, February 2, 2012

How Will Facebook's IPO Affect Charities?

The social networking behemoth Facebook filed papers yesterday to raise $5 billion in its initial public offering (IPO) of stock.  This is good news for Facebook employees and their investors, but what does it mean for charities?  It depends on who you ask.

MSNBC ran a piece on this subject yesterday, and it suggested that this new influx of wealth to Facebook employees could mean big bucks for nonprofits.  Why?  Facebook has provided their employees with stock incentives over the years, and they will be able to use these to cash in on the IPO.  Experts like Rob Mitchell of Atlas of Giving told MSNBC that when individuals' personal wealth increases, it makes them more likely to want to start a philanthropic legacy.

Patrick Rooney, executive director of The Center on Philanthropy at Indiana University, agreed with Mitchell, citing studies that show entrepreneurs are about twice as generous than people who inherit their wealth.

All of this doesn't guarantee that these new millionaires will start donating to charity.  In fact, there are some who don't think Facebook employees are all that likely to start being philanthropic, at least not immediately.  Robert Frank, a writer for The Wall Street Journal, told MSNBC that he thinks they are much too young to think about starting their philanthropic efforts.  He argues that they are still in the "accumulation phase" of their lives, and want to focus on changing the world through their company, not their philanthropy.

Charities will ultimately see a lot of money come in as as result of Facebook's IPO.  It's just a question of how soon.  You can read the full story on MSNBC.

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